Disney theme parks take $3.5 billion hit this spring

Disney on Tuesday posted a quarterly loss of $4.7 billion during the spring heart of the coronavirus pandemic, including a $3.5 billion drop in income from the company’s shuttered theme parks.

The company brought in $11.8 billion in revenues across all segments in April, May and June, a 41 percent drop from the same three months in 2019. Global revenues for the company’s parks, resorts and cruise shops was at $983 million, an 85 percent drop year over year.

And while Disney’s Florida parks reopened in July, chief financial officer Christine McCarthy said early revenues were “less than we originally expected due to the recent surge of COVID-19 cases in Florida.”

“This is obviously a highly uncertain time,” said Disney CEO Bob Chapek. Florida’s coronavirus cases “gave some level of trepidation for travelers who were anxious about long-distance travel, jumping on a plane and flying to Walt Disney World.”

Disney’s stock price closed at $117.29 a share on Tuesday, up slightly on the day.

The company’s theme parks in California are still closed indefinitely, as are its cruise lines. Major movie releases have been delayed, and the company’s Broadway shows are still dark.

Disney has paused a Mary Poppins-inspired attraction in the U.K. section of Epcot and the long-awaited reimagining of Spaceship Earth, inside Epcot’s iconic sphere. The project was scheduled to begin in May.

The Magic Kingdom’s upcoming Tron coaster looks not to be affected by the pandemic, with construction having resumed, but a Ratatouille 3D ride and the Space 220 restaurant at Epcot have already missed their planned spring openings.

Disney World’s water parks, Blizzard Beach and Typhoon Lagoon, have not reopened, with no date set for them to resume. Mickey’s Not-So-Scary Halloween Party at the Magic Kingdom has been canceled this year; the company has not made a decision about its parks’ Christmas events.

Investors expected the report to be grim. In Disney’s second quarter report, the company posted lost revenues of $1.4 billion, most of that from its parks.

“Many of Disney’s operations require bringing people together in large groups,” said Parkev Tatevosian, who specializes in consumer spending for the Motley Fool investment site. “The company won’t get back to running on all cylinders until there is a vaccine or treatment breakthrough for the coronavirus.”

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Disney has gotten high marks for its slow reopening of its theme parks after four months of closure. It was the last of Florida’s theme parks to reopen in mid-July and it has been rigorous in enforcing face mask policies and social distancing.

It has already updated its face mask policies twice since it reopened its Florida theme parks, once to close the loophole that allowed guests to walk around without a face covering if they were eating or drinking. Last week it updated its policy again, banning neck gaiters, triangle bandanas and masks that have valves, mesh or holes of any kind.

An Atlantic magazine writer who visited the Magic Kingdom in July noted Florida’s place as a national hotspot for conoravirus cases and called Walt Disney World “a little bit of Singapore in the midst of America’s Yemen. ... It is nothing if not competently administered,” wrote Graeme Wood.

Florida’s other theme parks have struggled financially, too.

Comcast, the parent company of NBCUniversal, said last week its theme park revenue dropped 94.1 percent during the second quarter. The company has pushed back the opening of its planned Epic Universe park and announced it will lay off more workers at Universal Orlando.

“The road back will be gradual and bumpy, but I’m confident this business will return to its historical levels of financial performance,” NBCUniversal CEO Jeff Shell said during a July 30 conference call with investors.

Also last week, SeaWorld Entertainment projected a quarterly loss of $105 million across its 13 parks, including Busch Gardens and Adventure Island in Tampa, with both attendance and revenue dropping more than 95 percent year over year. It will release an updated earnings report next week.

Entering July, representatives for all parks point to some bright spots. Customers appear ready to plan vacations down the line, as SeaWorld said bookings for 2021 at Discovery Cove are outpacing those for 2020 at the same time last year.

Disney, meanwhile, highlighted the success of its new streaming service, Disney Plus, which brought Hamilton to living rooms in early July. The service has reached 60.5 million subscribers, putting it far ahead of initial projections of 60 million to 90 million subscribers by 2024.

The company announced Tuesday that it will release the long-delayed Mulan for home viewing on Disney Plus at a price of $29.99. It will also launch a new streaming service in 2021 under its Star brand, bringing in content from the libraries of ABC Studios, Fox television, FX and other studios.